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TMI Blog2022 (5) TMI 669X X X X Extracts X X X X X X X X Extracts X X X X ..... carried out on 18.02.2014 in the case of Raj K Shah & Group at its office and residence of the key person Raj K Shah. The assessee is a Private Limited Company in which Raj K Shah is a Director. The assessment in the case of the assessee company was completed u/s 143(3) r.w.s. 153C of the Act, determining total income at Rs..2,89,66,121/- on 30.12.2016. In response to notice u/s.153C of the Act, assessee filed return of income manually declaring total income at Rs..12,48,04,590/- on 11.01.2016. However, in view of the fact that the assessee company failed to pay the self-determined Self-Assessment Tax of Rs..5,67,86,980/-, the Assessing Officer treated the manual return to be invalid u/s 139 of the Act. 4. While verifying the assessment records Ld.Pr.CIT, Mumbai observed that Assessing Officer having invalidated the manual return filed by the assessee in response to notice u/s.153C, he ought to have considered the details of manual return while completing the assessment u/s 143(3) r.w.s. 153C of the Act. Since the assessment was prima-facie erroneous and prejudicial to the interest of revenue, proceedings u/s. 263 of the I.T. Act were initiated by issue of notice u/s. 263(1) of th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ant craves leave to add, alter, amend and/or withdraw any ground or grounds of appeal either before or during the course of hearing of the appeal." 7. Ld. AR submitted his written submissions which is reproduced below: - "Facts of the case: 2. The following are the facts of the case relevant to dwell upon the issue as to whether the Pr. CIT was justified in passing the revision order u/s.263 of the Act:- (a) A search and seizure action under section 132 of the Act was carried out on 18.02.2014 in the case of Raj K. Shah (Director of the Appellant Company) at his office and residential premises. However, there is No Search Warrant in the name of the Appellant herein and thus the assessment proceedings were carried out invoking provisions of sec. 153C of the Act; (b) During the course of search proceedings, 15 red coloured notebooks were found from the possession of Raj K. Shah, wherein certain noting of receipts and payments were found relating to On-money received from bookings done by various customers; (c) The explanation given in course of search action in respect of the contents of 15 red coloured notebooks was that: (i) the noting in the said notebooks were made b ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... hod of accounting, the total amount of Rs.28 crs. was bifurcated and offered in the assessment years as per following tabulation- Assessment year Sales offered as per audited financials %of total offer Undisclosed income offered 2012-13 35,25,23,880 44.94 12,58,38,469 2013-14 13,18,22,552 16.81 4,70,55,956 2014-15 30,00,45,550 38.25 10,71,05,575 Total 28,00,00,000 (f) On the basis of the evidences found in the form of 15 red coloured notebooks containing noting regarding on-money receipts in respect of project undertaken by the Appellant herein and on the basis of the statement of Raj K Shah recorded under section 132(4) of the Act on 18.02.2014 making the offer as above, the A.O. issued notice under section 153C of the Act on 30.10.2015 for both the years; (g) In response to notice received under section 153C r.w.s. 153A(1)(a) of the Act the Appellant herein has filed return of income on 11.01.2016 declaring total income of Rs.12,48,04,590/- for AY 2012-13 including the amount of Rs.12,58,38,469/- offered as per above tabulation. Similarly Appellant herein has filed return of income on 11.01.2016 declaring total income of Rs.11,60 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ars i.e. AY 2011-12, AY 2012-13:- "7.13 Invalidation of Return of Income filed u/s.153C for A. V 2012-13 & 2014-15: However, the return of income for A. Y. 2012-13 and 2014-15, filed manually, were invalidated by the fact that Self-Assessment Tax remained unpaid for more than 11 months. Vide letter dated 15.11.2016, the assessee had been intimated about the defect in the return of income for A. Ys 2008-09, 2012-13, 2013-14 and A.Y 2014-15. The assessee had been given 15 days time to rectify the defect in the return by paying Self Assessment Tax. Vide letter dated 05.12.2016, it was intimated to the assessing officer that Self Assessment Tax had been paid for A. Y 2008-09 and 2013-14. Further, final intimation u/s 139(9) of the Act was served on the assessee on 26.12.2016 requiring the assessee to pay Self Assessment Tax for A. Ys 2012-13 & 2014-15 by 28th December 2016 as the assessment proceedings u/s 153C r.w.s 143(3) were required to be completed. However no communication was received by the office of undersigned assessing officer on the same. Accordingly, the return of income for A. Y 2012-13 and A. Y 2014-15 stands invalidated and deemed as if the assessee failed to furnish ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... y seized in the course of search action and for which the Appellant had asked set off against the source of funds being on-money receipts, the same is also rejected by the AO since the AO has added the accommodation entry relating to the Appellant amounting to Rs.3 crores in its hands in AY 2012- 13 and the remaining amount of accommodation entries and excess jewellery is added in the assessment orders passed in the case of Shri Raj K. Shah. 14. The total addition made by the AO in respect of on-money, accommodation entries and excess jewellery in all the entities of the present group is tabulated as under- SR.NO Nature of Addition RahulRaj Estates P. Ltd. (Appellant) RRahulRaj Realtors P. Ltd. Shri Raj K Shah. Total 1 On-Money receipts 46,94,71,274 60,08,50,444 NIL 107,03,21,718 2 Scrap Sales 22,72,100 22,72,100 NIL 45,44,200 3 Accommodation Entry 3,00,00,000 NIL 24,87,83,391 27,87,83,391 4 Excess Jewellery NIL NIL 11,42,104 11,42,104 Total 50,17,43,374 60,31,22,544 24,99,25,495 135,47,91,413 15. From the above table, it can be seen that the AO has made addition in respect of both the source of funds as well as ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ot taken into consideration the details of undisclosed income submitted by the Assessee, vide the manual revised return u/s 139(5) of the Act. The AO has held the manual return to be invalid for non-payment of Self Assessment Tax, without taking into consideration the information and figures regards income suo moto offered in manual return, even as it was treated as invalid for non-payment of Self Assessment Tax, while assessing the total income u/s 143(3) of the Act. Hence, the order is found to be erroneous in so far as it is prejudicial to the interest of revenue in terms of Section 263 of the Act. (b) The submission of the assessee w. r. t. pendency of appeal at CIT(A), is not found tenable in view of the fact that the subject matter / grounds of appeal for such appeal are different from the proceedings u/s 263....... (c) The AO has not considered the figures reported in the manual revised return of income filed u/s 139(5) of the Act while assessing the total income of the assessee and hence, the case of the assessee clearly falls under clause (a) of Explanation 2 to the section 263 wherein; (a) The order is passed without making inquiries or verification which should hav ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... d by the Pr. CIT is based on incorrect facts and baseless allegations and the observations made in para 5.2 of the order as reproduced hereinabove are contrary to the factual position. The observation of the Pr. CIT in para 5.2 - clauses (a) to (c) are factually incorrect and rebutted as under- (i) it is undisputed fact that entire on-money addition is made by the AO in AY 2011-12 whereas the Pr. CIT observes that the same is neither apparent from assessment order nor assessment records. In fact, the AO has in very clear and categorically held in para 7.13 and para 7.14 of the assessment order of all the 3 Asst. years 2011-12, 2012-13 and 2014-15 that entire on- money receipts are taxed by him in AY 2011-12 and also rejected the contention of the Appellant to tax the same on the basis of project completion method of accounting and in subsequent years as offered by the Appellant; (ii) The AO has added gross on-money receipts of more than Rs.47 crores including scrap sales in hands of the Appellant herein as against the offer of Appellant of Rs.28 crores; (iii) The AO has duly considered all the figures and amounts in the assessment order and tabulated the same from para 7.9 on ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 2011-12. 28. Had the AO once again added the on-money disclosed and offered by the Appellant in AY 2012-13 and 2014-15 after holding the return u!s.153C as invalid, the AO would have contradicted his own stand of - (a) firstly, taxing the entire gross on-money receipt plus scrap sales of Rs.47 cr. as against the offer of the Appellant of Rs.28 cr. as this would have lead to conclusion that the AO has accepted the offer of Rs.28 cr.; (b) secondly, AO has taxed entire gross on-money receipts in AY 2011-12 as per the noting in 15 red colored notebooks by rejecting the contention that it has to be taxed on project completion method of accounting in subsequent years whereas if addition were made again on basis of disclosure of Appellant in AY 2012-13 and 2014-15, then it would show that the AO has accepted the contention of the Appellant to tax the on-money receipts in the years in which the project is completed and on the basis of apportionment as done by the Appellant. 29. Hence the assessment order passed is NOT erroneous in so far as prejudicial to the interest of revenue and accordingly order passed under section 263 of the Act deserves to be quashed. In this regards, the A ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... d assessee was given 15 days' time to rectify the defect in the return by paying Self-Assessment Tax. Further several intimations were made to the assessee regarding defects in the return and since Assessing Officer has not received any communication from the assessee, he treated the return filed by the assessee manually as invalid. We observed that Assessing Officer himself observed that assessee has offered Rs..12,58,38,469/- based on the Project Completion Method. However, he himself rejected the project completion method on unaccounted receipts. He observed that theory of applicability of project completion method is rejected as these receipts would have never been accounted as per project completion method had the search and seizure action not happened. Further, Assessing Officer observed that since 15 red colored notebooks pertain to a specific period for the Financial Year 2010-11. The unaccounted receipts pertain to RRM on the last date of Financial Year 2010-11 have been added to the total income of the assessee for the A.Y.2011-12. After recording that and rejecting the manual return filed by the assessee he proceeded to complete the assessment based on the original retur ..... X X X X Extracts X X X X X X X X Extracts X X X X
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